Husky to Submit Devt Plan for South China Sea Gas Field

SYDNEY (Dow Jones Newswires), Aug. 28, 2009

Canada's Husky Energy Inc. said it expects to submit a development plan for its Liwan 3-1 gas field in the South China Sea late this year or early 2010 after fresh encouraging drilling results.

Husky said its third appraisal well on the Liwan discovery flowed at a restricted rate of 52 million cubic feet a day, bolstering expectations it will ultimately produce three times as much gas.

The flow rate was in line with two previous appraisal wells drilled in February and May, Husky said. The data are important for the front-end engineering design, or FEED, which is currently underway.

Recoverable natural gas reserves at the Liwan field were estimated at 4 trillion to 6 trillion cubic feet when it was discovered in June 2006, making it China's largest offshore gas find to date.

China National Offshore Oil Corp., which is the state-owned parent of Cnooc Ltd. (CEO), and regulatory authorities in China need to approve the development plan before Husky can move toward commercial operations at the field.

"First gas production is targeted to be in the 2013 timeframe," Husky said in a statement.

Cnooc Ltd., China's largest offshore oil producer by capacity, has the right to back into any commercial oil or gas discovery with a 51% stake.

The Liwan discovery reignited interest among Western oil companies in the South China Sea as a frontier region for oil and gas exploration after several wells drilled in the 1980s turned up dry.

London-listed BG Group (BG.LN), and U.S. oil producers Devon Energy Corp. (DVN) and Anadarko Petroleum Corp. (APC) have acquired deepwater blocks in the area, and either drilled wells last year or are planning drilling campaigns.

Husky said it now plans to drill two exploration wells north east of the Liwan 3-1 field in block 29/26, located around 350 kilometers southeast of Hong Kong, using the West Hercules deepwater rig.

The Calgary-based company also has a 40% stake in the Wenchang oil field, and five exploration blocks in the South China Sea and one block in the East China Sea.  

Copyright (c) 2009 Dow Jones & Company, Inc.

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